The cost of slow pace of reforms

I checked my phone as soon as I woke up on Election Day and what greeted me was an e-mail from a friend. He forwarded the facsimile of the front page of Jakarta Globe with the headline: What Cost for Slow Reform.

What an appropriate thought on the very morning I was to cast my vote. My vote last Monday should be a revalidation of my vote for P-Noy in 2010. I can’t say I am sorry I voted for P-Noy. In fact, good and bad taken together, I ought to be more glad than sorry for the way I voted in 2010.

The sorry part has to do with exactly what the headline of the Jakarta Globe was complaining about. Here in Manila as it is in Jakarta, the reformist governments in control have disappointed their supporters over the slow pace of reforms.

To be fair, the problems in Indonesia and here in the Philippines are too ingrained and too complex so that reforms naturally take time to hold. But the real concern now has to do with the willingness to make the decisions to initiate reform.

I googled the article in Jakarta Globe and found out the basis of the growing disenchantment with the reformist President Susilo Bambang Yudhoyono.

“Government’s hesitation to make decisions and take action might undermine investment and confidence,” the Jakarta Globe complained. Honestly, we could complain about the same thing about P-Noy as well.

 â€œEven as Indonesia registered stellar economic growth in the past few years, doubts about the government’s commitment to bureaucratic reform and governance have begun to grow. The lowered debt outlook by ratings agency Standard & Poor’s earlier this month may only be the first salvo in a turning tide of perception unless critical action is taken.”

Oh good grief. That describes us too and the danger we face. Indonesia, once the darling of the analysts and the rating agencies, just got a lower outlook after all the earlier excitement about the reforms initiated by President SBY started to fizzle out.

And according to the Jakarta Globe, it is all because the slow pace of reforms is tantamount to doubt about government’s resolve. â€œTellingly, S&P noted that the reason it had lowered Indonesia’s sovereign rating was that it did not see tangible signs or political will to tackle difficult issues.”

The Jakarta Globe continues: “What worries investors is not just government flip-flops over energy policy but the growing protectionist sentiment within certain segments of the government, a little more than a year before the presidential election. The recent fallout over beef imports and agricultural products, for example, has also negatively impacted the country’s credit standing.”

Okay… that simply describes what is happening here too. The Jakarta Globe observes: “While such policy flip-flops will not derail Indonesia’s short-term economic outlook, they might affect the country’s longer-term performance.

“Foreign direct investment has been one of the key components of the current growth spurt, but it could dry up if investors sense a change in government attitude and if other opportunities open up…” In our case FDI has yet to materialize.

I hope P-Noy and his economic managers realize that… credit rating agencies are likely to change their outlook if they start to feel there is no political will to make the hard decisions to get our economy in shape. Then a downgrade follows.

So here we are two days after the mid-term election and the P-Noy administration is in the second half of its watch. Making a difference is now or never. Hesitation, the hallmark of the first half, can be justified as learning the ropes. If they haven’t learned how to handle the ropes by now, they are simply sunk.

I believe the first big problem facing P-Noy and his economic managers is getting investors, local and foreign, to risk capital in job creating businesses here. The locals have tons of money sleeping in the BSP vault. The foreigners are just happy to come in via the equities market because it is an easy way in and out… but no impact on our real economy.

We don’t need a library full of studies to figure out what would make the investors happily invest. The Foreign Chambers have published Arangkada at the beginning of P-Noy’s term and the points raised there are basic and still crying for serious attention.

As a communications professional, I have to also point out a need to deliver on symbols to get the spirits of our people up. The overwhelmingly positive reaction of Pinoys everywhere in the world to the It’s more fun in the Philippines tourism campaign is proof that folks are just waiting for a good program to cheer on.

Consider the national pride in seeing the country message on the side of a London double deck bus or a San Francisco tram. But cheerleading eventually sounds empty without the product.

Nothing lifts the spirits of people more than completed brick and mortar infrastructure. Virtual, as in only in the minds of the bureaucrats, is not good enough. We need to build and rebuild so much infra to entice investments in agriculture and industry we badly need.

If P-Noy can get DOTC to get off their behinds and out of their air conditioned offices and go out there and build those airports and commuter train extensions and civilize NAIA, that would be a big plus to the national psyche.

I get the impression that P-Noy’s executives are afraid to make decisions. If government can’t do it, just quickly privatize. But decide… don’t let the projects vegetate.

On another point, P-Noy will have to get that discussion going on revising the ownership provisions in the Constitution… even as a symbolic gesture. P-Noy’s stubborn stance on foreign ownership is being taken by potential investors as reason enough to fear not the current provision itself but the power of the vested oligarchs who want that provision to stay. It suggests a playing field that is far from level.

Then there are things such as an industrial policy that would attract investors to create the jobs we need to make our economic growth inclusive. There are labor policies that have to be reviewed as well if we want to get some of that migration of labor intensive manufacturing from China now going to our neighbors, notably Myanmar.

And yes, as I wrote last Monday, do something very visible and very quickly about our gateway airport--- NAIA. Being a citizen of a country with one of the world’s worse airports is an unjust psychological burden every Filipino traveling abroad must now carry. We as a people already feel bad about our massive poverty… we don’t need an embarrassment like NAIA to drive us further into our shells in shame.

Here is an e-mail I received from a Fred Robinson in reaction to my Monday column:

“I’m a very frequent traveler and I took the Cebu Pacific flight to Shanghai last week. The entire time I spent in the terminal I was thinking it can’t be normal having no air conditioning. I thought I was in Africa. I’m sure glad to know somehow someone can make things happen and get it fixed. Thanks for that. Get competent people to run things.”

Here is one text message I got:

“Re: your column today in PhilStar. You hit the target dead center! Fantastic read! Must share. Just wanted to add to what your wife experienced in NAIA T3.

“Last May 11 when everybody’s going back to their provinces, NAIA closed down one whole row of CebPac check in counters – probably 10 counters. Reason – they were retiling the floors!

“So this is one plus no aircon inside the terminal, plus the collective summer and body heat MAYHEM!”

Rene B has this to say:

“Despite all the favorable news about the present administration, what matters most is what we actually see.  NAIA is definitely one of our showcases for public service.  And we fail miserably in it. 

“My wife who is traveling right now also made the same comment regarding the air conditioning at NAIA. Nothing has really changed but we don’t read this in the papers (except in your column).  You are credible because I know you to be a P-Noy supporter.”

There are more but the drift is the same.

Decisions. Actions. Two things we need to see from P-Noy and his boys in this second half. Slow pace of reforms means lost opportunities and heaven knows we can’t afford to lose any more opportunity for growth that is out there.

Politicos

According to Arturo Acosta, Nikita Khrushchev once made the comment: “Politicians are the same all over. They promise to build a bridge even where there is no river.”

And may I add, do nothing where there is.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco